SUMMARY: The bad news first: fewer than 10% of lists on the rental market today may be safe. The rest are gathered using questionable tactics.

However, if you can get your hands on a good list, email is still a great tactic for many campaigns. This useful article reveals the 5 steps to tell if a list is safe, and how to tell if email is your best investment versus other media.

When list broker Josh Perlstein, Executive VP Response Media, saw one of his client's names - Olay - on MarketingSherpa's List of Shame a couple of weeks ago, he contacted us a heartbeat later.

"As a policy, we check DEEP into any list source we recommend to our clients," he said. "This vigilance and time is the only way to keep clients on the safe side of the spam problem."

So how did one of his clients, who include Procter & Gamble, Pfizer and IBM, end up on our list of brands appearing in mail sent to proven junk lists?

It wasn't Olay's fault. Turns out a junk mailer had used Olay's brand without permission in order to boost response for a separate offer.

This type of problem happens constantly to famous name brands. (See below for a link to a how-to article to help if it happens to you.)

And it's not always possible to find out easily who's at fault - so we've put our List of Shame on hiatus for a short time while we line up ways to bring it to you without fear of outing the wrong people.

In the meantime, we asked Perlstein to tell us exactly how one goes about renting a list without fear (or shame.)

(BTW: If you're wondering if it's ok to rent lists at all, also see a link to our no-cost Top 10 Rules of Thumb article below.)

-> Less than 10% of lists on the market may be safe to rent

"Let's say there are about 5,000 lists on the market. We've found no more than 250 that we feel very comfortable with," says Perlstein.

His rough estimate matches what we've heard off the record from several other reputable brokers. Sad but true.

Luckily, the 250 include between them several hundred million names. Plus, we were surprised to learn that Perlstein says there's much less duplication between names on OK lists than one might ever think.

"I've found dupes to be under 3%, even if it's a highly selected list such as names chosen on a geographic or interest basis, which usually increases duplications."

However, duplication rates on junk lists can be as high as 100% because some lists are marketed under several different names, so you may not know you're renting the same exact list twice.

Here's how to distinguish good lists from junk lists...

-> Specific steps you can take to see if a list is safe

These are the five steps that Perlstein's team take when researching a list for safety.

Step #1: Check common blacklists for the sender's IP address

List rental data cards rarely give you the IP address that the owner uses to mail from, so you'll have to ask for these specifically.

"We call the list manager or owner and ask, 'Can you send us a sample from your email server?' or we go to the Web site and sign up for ourselves and look for it on the first email from them."

Then look at blacklists such as SpamCop and Spews.org to see if that IP address shows up.

Note: don't freak if the IP address shows up occasionally. "If you send enough email, you'll be listed even if you're completely legit," notes Perlstein. That's because lots of people try to blacklist mail that's not strictly spam. (Even MarketingSherpa and Microsoft have been blacklisted in the past.)

"If we see 57-pages of listings, we know there's a problem. If you haven't been de-listed, we ask for explanations."

Step #2. Check out abuse email groups

Perlstein recommends that you look up the mailer at the Google group news.admin.net-abuse, which is a discussion group for network admins at corporations and ISPs who constantly check with each other to see which junk emailers they should filter.

"We look for companies that don't have excessive complaints. If they have a handful, that's normal. If it's excessive, it's trouble."

Step #3. Watch to see if the list owner switches IP addresses

"If we see some complaints, but they've kept the same IP for years, that's a good sign because they're not trying to hide. If they keep switching, we write them off immediately."

Step #4. Set up dummy mailboxes to catch junk

Perlstein's team have set up almost 100 email accounts in various locations - including Hotmail, Yahoo, Earthlink and other popular places for junk mailers to hit with dictionary attacks. Then they check them on a routine basis to see which mailers and lists are filling the non-permission boxes up.

Obviously any list that sends a mailing to one of these boxes is stricken from the list of reputable rental files.

Step #5. Verify the original point of name collection

If the list is from a single site, then someone on Perlstein's team surfs over to see the form with their own eyes and make sure that it's clear and meets the client's permission standards (for example, some clients specify no pre-checked boxes.)

If the list is from a network of sites, Perlstein requires that the rental manager hands over a list of every single site that names are gathered at. And, then these sites are all checked one by one as well.

"If you can't tell us specifically where names came from, we're not renting it."

Plus, Perlstein notes that in the case of networks, he always strongly advises clients to make sure the creative will clearly note which exact list each name came from. "I typically steer away from wording like, 'you're getting this because you signed up at a partner's web site.' I hate that."

-> When to use rental lists -- and when to use other media

Perlstein recommends that you decide on which media and lists to go with strictly based on the final expected ROI of your campaign. (Many marketers make the mistake of basing their choices on initial CPM instead -- one reason why so many rent such bad lists.)

If you are trying to reach an extremely mass audience, online advertising such as banners and (especially) text links may be a far better choice for ROI than email.

If you are trying to reach an extremely niche audience - for example women aged 35 in a particular zip code who like quilting - direct postal mail may be your best bet because although CPMs are high, DM may be the only way to get that tight a selection.

If you are trying to build your own email database, Perlstein strongly recommends buying co-registrations on third party sites that relate to your demographic. However, be aware that as your database grows, the duplication rate will grow too. So ultimately each name may be more expensive.

(Even if you arrange to pay for only non-dupes, site owners catch on and raise per-name costs accordingly after awhile.)

Other times it's a great idea to rent a list:

- If you can get a recency selection on a targeted list, absolutely test it because name recency makes a huge difference in response. The good news is many list owners don't charge more for this, and it's sometimes available even if it doesn't appear on the formal data card.

The bad news is only about 25% of lists offer recency.

- If you can get a list tossed in, or cheaper, with a multichannel media buy, grab it and run your campaign concurrently. Tests from multiple mailers show campaigns sent through several media at the same time always get better response rates.

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